Executive Condominiums (ECs) are a class of housing introduced by the Government in 1994 to meet the social aspirations of Singaporeans to live in private homes. ECs come equip with most of the amenities of their private counterparts – from swimming pools to security guards – but are relatively more affordable.

So when private housing prices dropped significantly in the first half of the 2000s, the Government stopped churning ECs out.

Only in the fourth quarter of 2010 were they built once again.

Just what are the attractions and drawbacks of buying an EC?

Financing

Commonly regarded as a hybrid type of housing as it is bound by certain ownership rules governing HDB flats in its first 10 years. But on the other side of the coin, buyers purchasing ECs from the developer, similar to the purchase of HDB flats, are eligible for a type of CPF housing grant. Visit HDB, “CPF Housing Grant for Family EC”, for the details of the grant quantum which is based on household income and citizenship status.

Unlike their HDB cousins, however, ECs cannot be financed with a HDB loan. This implies that a portion (5% of the purchase price) of the down-payment has to be financed in cash. But since ECs from developers are usually priced at 20-30% below private condominiums, this makes it easier for buyers to save for it.

Rules

All ECs are on 99-year lease, differing from private condominiums which come in lease ranging from 99-year to freehold.

And only Singapore citizens are eligible to buy new ECs.

Similar to HDB flats, ECs have a Minimum Occupation Period of 5 years, during which there is to be no sale of the house, no subletting of the entire house, and no purchase of a private house.

Once the 5-year period has lapsed, a remaining rule dictates that ECs can only be sold to Singapore citizens and Permanent Residents.

ECs that have crossed the 10-year mark are elevated to full-fledged private housing status and can then be sold to foreigners. These ECs show a smaller price differential with private housing (Square Foot Research, “Executive Condominium”).

Therefore, after factoring in the CPF housing grants and relatively lower price tag, the capital gains to be made from ECs can be substantial if you can hold on past the 10-year period.


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